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Abstract
Nonnormative models of aggregative agricultural
production are frequently based on the correlation
of output variables with prices (usually lagged) and
outputs lagged over time. "Structural" models of
this kind relate these correlations indirectly to the
behavioral and technical structure that gives rise to
them. The main purpose of this paper is to show
how a knowledge of structure may be used to construct
a model that simulates the aggregate actions
of producers. The resulting model is useful in explaining
past production patterns, in predicting
future changes, and in assessing effects of alternative
policies. A further purpose is to provide a theoretical
understanding of the many forces that determine
production through time. The author develops
certain hypotheses of long standing in economic
theory in an explicitly empirical and institutional
context. He notes the following three as among the
most important: (1) The neoclassical concept that
firms maximize something when they determine output;
(2) the Marshallian relation of investment to
past profits and quasirents; and (3) the Schumpeterian
relation between investment and technological
change. To these he adds the use of behavioral constraints
that arise from uncertainty and lack of
knowledge. Some of the observations and principles
described in the paper are empirical rediscoveries of
certain theoretical principles cogently set forth by
Schumpeter (12).1 The method is also closely related
at some points to the work of Leontief (6, 7, 8),
Wood (14), Henderson (5), Georgescu-Roegen (3),
Marshall (9), Walras (13), and Nerlove (10). The
empirical research out of which the new approach
took form owes much to staff members of the Farm
Economics Division, Economic Research Service.
Thanks are due the National Cotton Council for support
in the preparation of this paper.